How Can Medical Practices Avoid Losing Money

Overview

Far too often, medical practices are very reactive when it comes to revenue management. They wait until a problem develops that causes them to lose money, at which point they snap into action to try to fix it. 

But missed appointments and increased no-shows are not something you can address overnight. Mass claim denials are only going to get worse before they get better. The key is not to find a solution to a problem that has already happened. Instead, it is to be proactive and prevent those issues from happening in the first place.

Thankfully, this isn’t quite as difficult as you might think – you simply need to keep a few key things in mind along the way. 

Over the last few years, there have been unprecedented declines in medical practice revenue. More care providers are struggling to ensure revenue streams stay consistent and pin down revenue leakage in healthcare. Here are the main reasons a medical practice loses revenue and the solutions to stop this loss.

Reasons Your Medical Practice is Losing Money

#Reason 1 – Claim Denial or Rejection Management

Mitigating claim denials is vital for financial health. Up to 10 percent of medical claims are denied annually, with 86 percent of those denials preventable. Track filed claims consistently, train administrative staff to prevent rejections with accurate initial inputs, and ensure staff knows how to handle rejections. Rejected claims may seem minor individually, but collectively, they can result in significant losses.

#Reason 2 – Too Many No-Shows

Missed appointments cost the healthcare industry approximately $150 billion annually, with each no-show costing an average provider around $200. To avoid such revenue leakage, implement automated patient reminder systems, like phone calls or text messages, and set clear policies on missed appointments.

#Reason 3 – Inaccurate Medical Coding Practices

Accurate coding helps reduce claim denials and maintain a balanced billing margin. Miscoding services, supplies, or bundled treatments can result in revenue losses. For example, one family practice lost $185,000 in a single year due to coding errors in over 70 percent of claims.

#Reason 4 – Lost Productivity

Losing even one fee-per-service daily could result in an annual revenue drop of up to $15,000. Lost productivity may arise from factors like underutilized EHR systems, excessive time on paperwork, poor scheduling, or extended time spent with patients due to complex needs. Ensuring optimal patient flow can curb such losses.

#Reason 5 – Excessive Overtime and Overstaffing

Uncontrolled overtime or overstaffing can significantly impact revenue. Practices consistently paying overtime may benefit from hiring additional staff instead. Conversely, overstaffing leads to payroll expenses with little output. Proper staffing management helps maintain financial stability.

#Reason 6 – Petty Theft and Embezzlement

Unchecked theft of practice supplies or embezzlement can drain profits. Implement regular inventory checks and monitor employees to prevent these losses.

#Reason 7 – Improperly Updated Fee Schedules

Outdated fee schedules impact revenue. Aligning with the RBRVS (resource-based relative value scale) by CMS helps ensure fees meet current standards. This prevents losses from underbilling for services.

How Can Medical Practices Avoid Losing Money? Strategies for Financial Health

Many medical practices are reactive about revenue management, responding only when issues arise. It is important to address areas that affect revenue, like missed appointments or claim denials. This helps prevent problems before they happen. Here are strategies for better financial management:

1. Revenue Cycle Management (RCM)

RCM is a vital approach that optimizes billing processes to prevent revenue loss. With efficient Revenue Cycle Management, medical practices can ensure accurate coding, minimize denials, and streamline collections. HFMA states that practices with RCM strategies can reduce days in accounts receivable by up to 30%.

2. Efficient Appointment Scheduling

To reduce revenue loss from no-shows, leverage appointment scheduling software that include reminders via SMS or automated calls. MGMA reports no-shows cost practices an average of $150,000 annually, making efficient scheduling crucial.

3. Patient Payment Solutions

Patient payment solutions can enhance collections by up to 20%. Offering online payment options enables easier, faster payment and supports better cash flow by reducing unpaid bills.

4. Claims Management

Efficient claims management, including automated claims processing, ensures timely, accurate submissions, which avoids revenue loss from delayed or denied claims. The American Medical Association states that 20% of claims face initial denial, underscoring the importance of managing claims to avoid financial strain.

5. Monitoring Key Performance Indicators (KPIs)

Track KPIs like accounts receivable and collection rates for ongoing insight into financial performance. Studies show that practices monitoring KPIs can improve financial performance by 10-20%.

6. Cost Management

Regular assessments of operational processes help identify areas where costs could be optimized without compromising care quality.

7. Staff Training and Development

Well-trained staff helps reduce costs by improving coding accuracy and minimizing errors. Regular training on billing and patient communication can help prevent revenue-related issues from developing.

Ways to Stop Revenue Leakage in Healthcare

1. Improve Collection Methods: Implement a thorough collection process aligned with billable hours to improve cash flow.
2. Keep Urgent Care Patients: Retain urgent care patients by adjusting hours, enhancing accessibility, or implementing telemedicine.
3. Adjust Your Marketing Strategy: Effective marketing on social media, in-office, and online can attract new patients.
4. Consider Monetizing After Hours: Extending practice hours can capture additional revenue by attracting patients who need evening or weekend care.

Takeaways to Remember from PrognoCIS

While medical practice revenue may ebb and flow, revenue-affecting factors can be controlled. Assess billing practices, staffing, and technology, as even an outdated electronic health record software can affect revenue flow.

At PrognoCIS, our EHR solution addresses many common financial challenges faced by medical practices, providing visibility into the financial health of your practice. Ready to see how PrognoCIS can optimise your revenue management? Schedule a live demo today.